Climate Change, Water Rights, and Water Supply: The Case of Irrigated Agriculture in Idaho

We conduct a hedonic analysis to estimate the response of agricultural land use to water supply information under the Prior Appropriation Doctrine by using Idaho as a case study. Our analysis includes long-term climate (weather) trends and water supply conditions as well as seasonal water supply forecasts. A farm-level panel data set, which accounts for the priority effects of water rights and controls for diversified crop mixes and rotation practices, is used. Our results indicate that farmers respond to the long-term surface and ground water conditions as well as to the seasonal water supply variations. Climate change-induced variations in climate and water supply conditions could lead to substantial damages to irrigated agriculture. We project substantial losses (up to 32%) of the average crop revenue for major agricultural areas under future climate scenarios in Idaho. Finally, farmers demonstrate significantly varied responses given their water rights priorities, which imply that the distributional impact of climate change is sensitive to institutions such as the Prior Appropriation Doctrine.